California Judge’s Ruling Spells Defeat for Board Diversity Law

A California board diversity law that required boards to maintain a specified number of members from underrepresented groups was struck down by a state judge as unconstitutional. The Wall Street Journal reports that the “quota” law was the first of its kind in the U.S. and followed a similar California measure enacted in 2018 that mandated female directors on all boards of the state’s public companies, which is also facing legal challenges. Law firm Fenwick & West in a client alert wrote that despite the court’s decision, California-headquartered companies should consider continuing board diversity efforts. “Even if an appeal of the decision is unsuccessful or the State of California decides not to appeal the decision, given the strong interest in and preference for board diversity, companies should consider the negative consequences of failing to have a diverse board.”